Cores of company law governing the creation and operation of registered companies
1.2 What is meant by ‘company law’
1.2.1 Core company law - Limitations of core company law
The attention is largely on the regulation governing the creation and operation of registered Companies. It is Very easy to pick out core company regulation nowadays as it's far nearly all contained in the sections and schedules of the Companies Act, regulations made pursuant to that Act, and cases clarifying the utility of the statutory regulations and concepts. That said, the Companies Act isn't always a whole code of middle company regulation within the sense of a body of regulations that has replaced all law policies and equitable standards previously found in instances. Certain aspects of core company law, including treatments to be had for breach of directors’ obligations, decided case stated regulation from statute law and plenty of cases decoding provisions beyond the Companies Acts continue to be relevant up to these days.
A comprehensive review of law relevant to companies would include Law of insolvency and securities regulation also known as capital markets law or financial services law to the extent that they apply to companies. In the past years, each of these areas of law has become a highly developed and voluminous legal subject in its own right.
1.1 Company Law comprises parts of securities regulations and Law of insolvency
Corporate governance has attracted a super deal of attention as crucial factor of business enterprise regulation and it is suitable to mention a few words approximately it inside the context of setting out what we suggest by way of company law. Corporate governance isn't always a common term, as an alternative, it is a label, or heading underneath which to analyse the questions how, by whom, and from whom corporate choices should or must be taken. Those who help in use of regulation and law to enhance corporate governance are stated to assist the ‘juridification’ of corporate governance, those towards are stated to opt for ’private ordering’. Company law and corporate governance overlap to the quantity that a brilliant a part of enterprise law is set how and with the aid of whom corporate selections may be made.
1.2 Corporate governance
Textbooks on company law differ in the extent to which they deal with law of insolvency , securities regulation and corporate governance. The approach taken in this post to each is set out in the following three sections.
1.2.2 Law of insolvency
Even though in theory they could, companies do not tend to continue in existence forever‘ They either outlive their usefulness or become financially unviable. Before a company ceases to exist, or is ’dissolved’, to use the legal term, its ongoing operations are brought to an end, its assets are sold and the proceeds of sale are used to pay those to whom it owes money. This process is called ‘winding up’ or ‘liquidating’ the company Some companies that are wound up or liquidated are able to pay all their debts in full, that is, they are ‘solvent’, yet the law governing winding up of solvent companies is set out in the Insolvency Act 1986 (and rules made pursuant to that Act, the most important of which are the Insolvency Rules 1986). The explanation for this is that most winding ups involve insolvent companies and when, in the mid-1980s, the law governing insolvent company winding ups was moved out of company law legislation into specific insolvency legislation, it made sense to deal with solvent winding ups in the same statute. This avoided the need for duplication of those winding up provisions relevant to both solvent and insolvent companies in both the Companies Act 1985 (now replaced by the Companies Act 2006) and the Insolvency Act 1986. Note that insolvency is a term relevant to both companies and individuals but in the UK the term bankruptcy is used only to refer to the insolvency of individuals, not companies. It is legally incorrect to refer to a company going bankrupt.
Law of insolvency is a highly detailed and specialised area of legal practice requiring study of specialist texts for a full understanding of its scope and complexity. Of the four key formal processes: voluntary arrangements, receivership, administration and liquidation (the process by which companies are wound up), voluntary arrangements and administration are outlined (in which receivership is also mentioned), and liquidation is examined.
During the liquidation process, the person appointed to conduct the winding up of a company, the ’liquidator’, has the power (amongst others), to apply to court for orders that certain individuals, often directors or people closely connected with directors, contribute sums to the company to swell the assets available for distribution to creditors.
It is important for anyone seeking to understand the law governing directors to understand the full range of potential liabilities and exposures of directors . Liquidators also have powers to review and challenge the validity of certain transactions entered into by the company in the ‘twilight zone’, that is, in the period of up to two years leading up to the commencement of winding up proceedings. Clearly, it is important for anybody seeking to understand the rights of those who deal with companies, to understand the potential for twilight zone transactions to be challenged by a liquidator.
Finally, once the assets of a company have been turned into money and any contributions secured, a liquidator is required to follow a statutory order of distribution which determines the priority of payment of different types of creditors. Given the significance of this statutory ordering to the decision whether or not to deal with a company and the terms on which to do so.
1.2.3 Securities regulation
The object of securities law is essentially to provide protections to those who decide to invest their money in securities (which are basically shares and corporate bonds), and the large number of complex investment products financial service providers have built around securities.
Securities regulation is part of what is often called finance law. For our purposes, finance law can be viewed as made up of three parts: banking law; the regulation of those who conduct investment business and the markets on which investments are traded; and, increasingly, the regulation of companies whose securities (shares and bonds) are offered to the public. Regulatory shortcomings highlighted by the global financial crisis of 2008 and its aftermath have resulted in extensive, ongoing reform of finance law.
The key securities regulation statute in the UK is the Financial Services and Markets Act 2000 (FSMA), as amended (most recently by the Financial Services Act 2010), and to be further amended by the 2012 Bill. That Act established and empowers the main securities regulator to make detailed rules governing securities. At the time of writing, the name of the regulator remains the Financial Services Authority (FSA) and the detailed rules are found in the FSA Handbook. Once the 2012 Bill comes into effect, the fimctions of the FSA will be split, with some functions being performed by the Prudential Regulation
The heart of securities regulation is disclosure of accurate information. This theme has been supplemented in recent years, in no small part because securities regulation is being used to implement legal initiatives to achieve good corporate governance, which is seen as supportive of efficient capital markets and essential to achieve economic growth, As for the sources of securities regulation, statutory provisions in the FMSA are supported by detailed rules (the FSA Handbook) produced by the FSA pursuant to powers under the FSMA, which rules are underpinned and supplemented by soft law such as the UK Corporate Governance Code and the Stewardship Code.
For aspects of securities regulation touched upon in this post are the prospectus rules, and the ongoing disclosure obligations, for more reference (Check Unlocking Company Law Susan McLaughhlin 2nd)
The attention is largely on the regulation governing the creation and operation of registered Companies. It is Very easy to pick out core company regulation nowadays as it's far nearly all contained in the sections and schedules of the Companies Act, regulations made pursuant to that Act, and cases clarifying the utility of the statutory regulations and concepts. That said, the Companies Act isn't always a whole code of middle company regulation within the sense of a body of regulations that has replaced all law policies and equitable standards previously found in instances. Certain aspects of core company law, including treatments to be had for breach of directors’ obligations, decided case stated regulation from statute law and plenty of cases decoding provisions beyond the Companies Acts continue to be relevant up to these days.
A comprehensive review of law relevant to companies would include Law of insolvency and securities regulation also known as capital markets law or financial services law to the extent that they apply to companies. In the past years, each of these areas of law has become a highly developed and voluminous legal subject in its own right.
1.1 Company Law comprises parts of securities regulations and Law of insolvency
Corporate governance has attracted a super deal of attention as crucial factor of business enterprise regulation and it is suitable to mention a few words approximately it inside the context of setting out what we suggest by way of company law. Corporate governance isn't always a common term, as an alternative, it is a label, or heading underneath which to analyse the questions how, by whom, and from whom corporate choices should or must be taken. Those who help in use of regulation and law to enhance corporate governance are stated to assist the ‘juridification’ of corporate governance, those towards are stated to opt for ’private ordering’. Company law and corporate governance overlap to the quantity that a brilliant a part of enterprise law is set how and with the aid of whom corporate selections may be made.
1.2 Corporate governance
Textbooks on company law differ in the extent to which they deal with law of insolvency , securities regulation and corporate governance. The approach taken in this post to each is set out in the following three sections.
1.2.2 Law of insolvency
Even though in theory they could, companies do not tend to continue in existence forever‘ They either outlive their usefulness or become financially unviable. Before a company ceases to exist, or is ’dissolved’, to use the legal term, its ongoing operations are brought to an end, its assets are sold and the proceeds of sale are used to pay those to whom it owes money. This process is called ‘winding up’ or ‘liquidating’ the company Some companies that are wound up or liquidated are able to pay all their debts in full, that is, they are ‘solvent’, yet the law governing winding up of solvent companies is set out in the Insolvency Act 1986 (and rules made pursuant to that Act, the most important of which are the Insolvency Rules 1986). The explanation for this is that most winding ups involve insolvent companies and when, in the mid-1980s, the law governing insolvent company winding ups was moved out of company law legislation into specific insolvency legislation, it made sense to deal with solvent winding ups in the same statute. This avoided the need for duplication of those winding up provisions relevant to both solvent and insolvent companies in both the Companies Act 1985 (now replaced by the Companies Act 2006) and the Insolvency Act 1986. Note that insolvency is a term relevant to both companies and individuals but in the UK the term bankruptcy is used only to refer to the insolvency of individuals, not companies. It is legally incorrect to refer to a company going bankrupt.
Law of insolvency is a highly detailed and specialised area of legal practice requiring study of specialist texts for a full understanding of its scope and complexity. Of the four key formal processes: voluntary arrangements, receivership, administration and liquidation (the process by which companies are wound up), voluntary arrangements and administration are outlined (in which receivership is also mentioned), and liquidation is examined.
During the liquidation process, the person appointed to conduct the winding up of a company, the ’liquidator’, has the power (amongst others), to apply to court for orders that certain individuals, often directors or people closely connected with directors, contribute sums to the company to swell the assets available for distribution to creditors.
It is important for anyone seeking to understand the law governing directors to understand the full range of potential liabilities and exposures of directors . Liquidators also have powers to review and challenge the validity of certain transactions entered into by the company in the ‘twilight zone’, that is, in the period of up to two years leading up to the commencement of winding up proceedings. Clearly, it is important for anybody seeking to understand the rights of those who deal with companies, to understand the potential for twilight zone transactions to be challenged by a liquidator.
Finally, once the assets of a company have been turned into money and any contributions secured, a liquidator is required to follow a statutory order of distribution which determines the priority of payment of different types of creditors. Given the significance of this statutory ordering to the decision whether or not to deal with a company and the terms on which to do so.
1.2.3 Securities regulation
The object of securities law is essentially to provide protections to those who decide to invest their money in securities (which are basically shares and corporate bonds), and the large number of complex investment products financial service providers have built around securities.
Securities regulation is part of what is often called finance law. For our purposes, finance law can be viewed as made up of three parts: banking law; the regulation of those who conduct investment business and the markets on which investments are traded; and, increasingly, the regulation of companies whose securities (shares and bonds) are offered to the public. Regulatory shortcomings highlighted by the global financial crisis of 2008 and its aftermath have resulted in extensive, ongoing reform of finance law.
The key securities regulation statute in the UK is the Financial Services and Markets Act 2000 (FSMA), as amended (most recently by the Financial Services Act 2010), and to be further amended by the 2012 Bill. That Act established and empowers the main securities regulator to make detailed rules governing securities. At the time of writing, the name of the regulator remains the Financial Services Authority (FSA) and the detailed rules are found in the FSA Handbook. Once the 2012 Bill comes into effect, the fimctions of the FSA will be split, with some functions being performed by the Prudential Regulation
The heart of securities regulation is disclosure of accurate information. This theme has been supplemented in recent years, in no small part because securities regulation is being used to implement legal initiatives to achieve good corporate governance, which is seen as supportive of efficient capital markets and essential to achieve economic growth, As for the sources of securities regulation, statutory provisions in the FMSA are supported by detailed rules (the FSA Handbook) produced by the FSA pursuant to powers under the FSMA, which rules are underpinned and supplemented by soft law such as the UK Corporate Governance Code and the Stewardship Code.
For aspects of securities regulation touched upon in this post are the prospectus rules, and the ongoing disclosure obligations, for more reference (Check Unlocking Company Law Susan McLaughhlin 2nd)
Tags : Corporate and Commercial